The positioning statement provides the first decision filter because it defines what you are, and any idea either needs to reinforce that identity or move you down a path defined by your vision.

An essential starting point for solving many product management problems is a clear positioning statement

In every company there is a constant dialogue of ideas from sales, marketing, and development on how to improve sales, handle changes in the market, and beat competitors. Combine this situation with limited resources and you are forced to figure out the best set of trade-offs. Most of the ideas will have some merit in isolation, so you need a good filter through which to keep, modify, and discard ideas. The positioning statement provides the first filter because it defines what you are and any idea either needs to reinforce that identity or move you down a path defined by your vision. Everything else is a distraction, or the basis for a new product.

The positioning statement is what you say if someone with a minimal understanding of your industry asks what your product is

If you had to answer in one sentence, then whatever you say is your positioning (or is derived from it). If I had to guess the positioning statement for McDonald’s, it would be the “world’s largest fast food chain.” From those five words my listener knows that it is a restaurant chain, but not high-end, the company is all about market reach, it is not a specialty chain, it competes internationally, and it is number one in market share. At this point, the listener has the big picture and everything else I say fills in details.

Creating a positioning statement forces you to figure out what you are best at, where you are in the hierarchy, and exactly what you are selling

If you don’t like your answer for any of those three elements then you have a good idea where you need improvement. A good statement also helps you filter all the ideas that need to be taken seriously and which should be rejected. This includes pricing, promotions, target market, partnerships, feature sets, etc. Once you know where your weakness is, then you know where to focus attention.

It is likely you are already using this process intuitively, but doing it more explicitly will help you defend your decisions, especially if you are rejecting an idea that sounds good in general but does not feel right for your particular product. Chasing mediocre ideas is always a drain on resources, but it is hard to reject them unless you have a better idea or can show that they will not solve the real problem.

To write a good statement, start with the following questions:

Where do you provide value?

What are you the best at in the industry?

What exactly do you sell?

Now write the long version of the positioning statement, a couple paragraphs if necessary. This gets the idea into writing and captures the important elements. Next, start refining it to a few sentences and finally one sentence. The longer versions will be useful, so keep them. The exercise will generally force you to think about your vision, your limitations, the market, and your competitors. If sales are lackluster, there is a good chance you are in a weak market or your rank in a good market is too low to thrive. Your goal is to position yourself as number one in some market segment, a position of strength from which you can grow.